Lunchables uncool?

"I can count on two hands the number of Lunchables I've seen since I started two years ago," says Priscilla Barbier, assistant principal at Thorp Scholastic Academy on the Northwest Side. Photo: Erik Unger

Lunchables, once a marketing success story for Kraft Foods Inc., have become stale.

Health concerns, competition from other convenient meals  even a declining population of children  have conspired against the kiddie lunch packs, sales of which have plateaued at $500 million since 2001.

Northfield-based Kraft is transforming its entire Lunchables line to contain fewer calories and less fat and sodium. But an earlier effort to market a healthier variety dubbed Fun Fuel flopped, leading observers to wonder: Are Lunchables no longer cool?

UNFORTUNATE TREND

"I'm in the lunchroom from the first lunch duty to the last, and I can count on two hands the number of Lunchables I've seen since I started two years ago," says Priscilla Barbier, assistant principal at Ole A. Thorp Scholastic Academy, an elementary/middle school on Chicago's Northwest Side. "The kids who are bringing Lunchables are the little ones. I don't think the bigger kids think it's cool anymore."

It's an unfortunate trend for a product whose target market consists of 6-to-12-year-olds  and a big problem for a company that needs to squeeze growth out of every brand possible in order to reach its target earnings growth rate of 6% to 9% a year. The Lunchables brand is one of Kraft's biggest, accounting for almost 22% of the Oscar Mayer division's $2.3 billion in sales last year.

After two years of sliding sales, the leaner, vitamin-fortified Fun Fuel Lunchables have experienced a recent surge  but only because retailers have been offering promotions in order to get them off the shelves, a Kraft spokeswoman says.

"With Fun Fuel, we haven't been as clear to moms that it's a nutritious Lunchable, and it's not being seen by kids as being fun," concedes Nick Meriggioli, general manager of the Oscar Mayer division. "We've tried again with Chicken Dunks and we think that's the model that works."

Chicken Dunks, which come with dipping sauce, were introduced last year, and Chicken Shake-Ups, a variety containing seasoning with which kids can coat their chicken, were launched recently using a Japanese anime-style cartoon ad campaign  an effort to up the cool quotient.

LINE EXTENSIONS ENOUGH?

There are more than a dozen Lunchables varieties, from breakfast combos to tacos. Kraft won't disclose sales for the newest additions but says Chicken Dunks are now the second best-selling Lunchables behind the pizza variety.

Nile Rowan, head of the Los Angeles office of Naperville-based consumer research firm Millward Brown Group and an expert on youth marketing, wonders if the line extensions will be enough to boost the brand.

"Little kids follow the same trends as older kids. But once older kids get tired of something, they move on to something else," he says. "When a kid gets to be 9 or 10, they don't want to wear or eat the same things as younger kids, so while line extensions may offer variety for existing customers, they may not necessarily bring in new ones."

When Lunchables debuted in 1988, the packs of meat, cheese and crackers were a breakthrough that spawned several imitators and earned Kraft numerous marketing awards. "When they first came out, they were very popular. Everyone wanted to sit next to the kid with the Lunchable," says June Bronkema, an office clerk at Thorp Academy who also does lunch duty. "I think the novelty has worn off."

COMPETING WITH OTHER ITEMS

Kraft still has the lunch combo market cornered, with 77%, but "now, there are other convenient items like Go-Gurt that make Lunchables less interesting than they were 10 years ago," says Tim Ramey, an Oregon-based food analyst at D. A. Davidson & Co., referring to Yoplait's yogurt-in-a-tube.

"Indirect competition is a major reason why our sales have been soft," Kraft's Mr. Meriggioli says, pointing to snacks like chips and yogurt.

Mr. Ramey commends Kraft for trying to make Lunchables more healthful  although the ham and American cheese Cracker Stackers still contain more calories and saturated fat than a McDonald's Quarter Pounder. But he questions whether the nutrition push can lift the brand.

"Kids don't particularly care about the health message and, in fact, may be repulsed by it," he says. "While moms control the purse strings, at the end of the day, they really only care if their kids eat."